RON DERBY, deputy editor, Financial Mail
What does the six year rule of president Jacob Zuma amount to? This question has its very obvious answers by his most vocal critics, which at times feels like the entire electorate. Nkandla of course is top of mind along with the growth in corruption, which has affected almost each and every single government department and even hallowed organs like the South African Revenue Services.
It is all rather tragic, a sad comment on just how low public confidence has grown in the political theatre that surrounds the ruling party’s headquarters and in turn the Union Buildings.
What I find the biggest indictment of the incumbents rule has been the inability of his government to think beyond immediate solutions for a country that is begging for long-term structural reforms. (And this isn’t another dig on age old gripe from the private sector over labour laws, because I think people are still very fireable with some paperwork.)
What has happened here is a ruling party fearful of its waning support in what is fast becoming a more competitive landscape both within and outside the party. Within the party, factions emerge at almost every branch meeting and outside the party, we’ve seen the emergence of the supposedly radical “Economic Freedom Fighters” and a better organised Democratic Alliance has only served to stoke tensions.
The outcome from which has seen the ruling party take its eye off the needs of an ailing South African economy – like much of the global economy. If we don’t adapt to this ever changing global economy, where ideas are the currency, we’ll only fall further behind.
The big elephant in the room at the moment is energy and the state of Eskom.
Just why the parastatal has become a drain on the national budget – already under strain from falling commodity prices because of China’s cooling appetite for resources – is because in the eight years since its crisis, we are yet to have developed a long-term strategic funding plan for the company. What we know is that even after the build of Medupi and Kusile, the company has to still build additional generating capacity, as some of its older stations will need to be retired at some stage.
Just how that will be done is contingent on the company having a revenue projection to take to potential funders in the financial capitals of New York or London. What’s needed is a plan longer than the three year tariff application that it puts before the energy regulator, the National Energy Regulator of South Africa. How does a bond investor even begin to look at funding Eskom off its own balance sheet if the company doesn’t know exactly what type of tariff it may get, especially as the process is influenced by political considerations?
What Eskom can bring to a potential investor in its bonds, is a short-term forecast of what type of tariffs it is likely to get. But of course, this is all contingent on the popularity of the governing party and when elections are scheduled. Let me be fair, it’s something many of the world’s leading democracies unfortunately fall trap to.
And if energy wasn’t as big a threat to the competitiveness of the South African economy, I’d perhaps say we can live with this modern day drawback of re-elective politics. But a country that needs to increase the size of its economy to at least begin to address unemployment – for no matter what you may hear out there is really at crisis proportions – we can’t afford the indulgence.
In order to fund its current build and the future expansion, Eskom needs to be able to put a revenue projection plan which as painful as it may be to all of us, will at least ensure that off its own balance sheet we are able to boost generating capacity.
If not, we’ll just continue papering over the cracks in the system, to the detriment of our national budget.
In an ANC that is so petrified of losing further support, I doubt the party can sell this to an already restless public. So from a funding crisis to funding crisis, that will be Eskom’s fate. And along the way, it will claim the lives of more of its CEOs.
In the ten years since the expansion programme began, the utility has had four chief executives and as many chairmen.
The same can be said about virtually every other state owned enterprise, there’s seemingly no one able or secure enough – even within Luthuli House – to make the long-term call, as they all come with some level of short-term angst that may play itself in polls or more worryingly at party elective conferences.
This is the biggest blight on the Zuma years: The inability to create certainty for both its citizens and potential funders of the much needed capacity expansion that this economy needs. Outside Transnet, whose mandate and policy direction hasn’t been messed around with much over the past six years, almost every other government agency that plays a role in the South African economy doesn’t know whether it’s coming or going.
Money knows how to make more of it, if the guidelines are clear. And people adapt to their new realities, if they are consulted and the greater goal properly explained. I am yet to get a leader like Zuma himself lay out the National Development Plan for the country.
It’s mentioned as the guiding principle of 2030, but just how much are we and the political leadership of this country really invested in some of the very good policies that have been put forward.
For them, personal security is of utmost importance, because as we have subsequently seen in two elective conferences since 2007, the tables can turn very quickly on even the most popular. And we are just too low in confidence to believe in the document.
Our politics is one of fear and little imagination…And this speaks to all political formations.
Publication: March 2015